This
BCC Research study is focused on the natural––based fatty acid industry, which
is part of the wider oleochemical industry. The natural based fatty acid
industry has been a workhorse in the chemical industry for a number of years,
but it is a brightly burning star today fueled by the green chemistry
agenda. The reason is that the raw material consumed to produce the
oleochemicals is mainly based on material that is renewable, sustainable and
readily biodegradable.
This
study reviews how the industry has recovered from the economic slowdown of 2008
and 2009, and how it will develop and change over the next five years through
2017. Global value demand for natural fatty acids, as well as the
byproduct glycerin, will grow 9.8% annually from the current manufacturing
value of $7.7 billion in 2011 to $13.5 billion through 2017. This is
based on the expectation that prices of key vegetable oils and animal fats will
continue to rise sharply during the six–year period due to pressure on stocks
from not only the fatty acid sector, but also the self–sufficient energy
generation (bio–fuel) and food industries as well as export taxes imposed on
key vegetable oils. In tandem, the demand for the base oleochemicals will
largely reflect the gross domestic product of the developing nations across
Asia, South America, Eastern Europe, the Middle East and Africa. However,
the profitability for the operators will be squeezed as raw materials are a
substantial portion of the manufacturing costs and there is difficulty in passing
these fully across to the customers.
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Derivatives
will experience the most growth, while personal and homecare applications will
reap the benefits of the drive towards greener and more biodegradable
chemicals. The wax applications (including candles and crayons) segment
is expected to benefit from the lack of sufficient paraffin volumes to meet
demand as a result of petrochemical refineries shifting production streams to
match demand from the motor oil industry. A shift towards alternative waxy
substances will also be driven by the high price of crude oil passing along the
whole fossil fuel supply chain.
This
study looks at the basic oleochemical business of fatty acids based on fats and
oils and touches upon the impact of the biodiesel industry on the market.
It presents historical demand data for 2008 and 2011, estimates for 2012 and
projections for 2017. It reviews the main markets for the major acid
types from stearic acid, distilled fatty acids, polyunsaturated (including tall
oil fatty acid: TOFA), fractionated fatty acids and monounsaturated oleic
acid. It reports on market sectors, reviews latest technology
developments including the patent space, provides a regional perspective,
examines the changing landscape of raw material and reviews the byproduct
glycerin market.
Market
shares provided by leading and active merchant players such as Emery
Oleochemical, Arizona Chemicals, Kuala Lumpur Kepong (KLK), IOI, Wilmar
International Vantage Oleochemical, Oleon, Felda, MeadWestVaco, Forchem,
Braido, Oxiteno and CremerOleo are profiled. The report looks at how
government incentives and regulations have impacted the industry especially
with respect to self–sufficient energy resources and animal fat
classification. It also assesses the impact of rising raw material
prices, tight supply and demand curves for certain acid chains, the uncertainty
of the economy in many of the developed countries around the world and the
impact of the Roundtable on Sustainable Palm Oil (RSPO) accreditation.
REASONS
FOR DOING THE STUDY
The
fatty
acid industry provides multiple products that are used in a wide range of
industries due to the functionality it offers as a result of its molecule
structure. A typical fatty acid has two reactive sites; the minor is the
double bonds situated along the straight alkyl chain, while the major is a
carboxylic acid group at the start of the chain. Thus, the molecule is a
starting material for a number of reactions changing the functionality and
performance dependent on the fatty acid derivative formed. Fatty acids
are excellent hydrophobes and thus are a key material for a number of very
important surfactant groups.
The
world economy is still in a fragile state with a number of financial stress
points impacting the more developed regions, oleochemicals will be a vital
resource to meet the ingredient needs of a number of specialty chemical
formulators and consumer facing companies.
Oleochemicals
service different types of markets, more industrial orientated segments require
ingredients that can achieve or even surpass the performance specification of
the application at a price that is affordable while the more wellbeing and
health orientated markets require ingredients that are not only suitable for
human contact, be that externally on the skin or internally such as orally
digested, but are sourced from renewable and natural grown origins. In
both cases ingredients consumed must meet all safety, health and environmental
regulations and legalization. Based on these types of demand the more
wellbeing sectors will grow faster in value terms with a CAGR between 12% and
16% from 2012 through 2017 compared to the industrial segment at between 7% and
10% over the same period.
There
are a number of governmental tax break incentives for using biomass to generate
energy and produce fuel products. There are also export tax incentives
for major tropical oil plantation countries to use local companies to develop
downstream manufacturing capabilities utilizing locally sourced
materials. Combined these incentives will have a profound effect on the
industry at various points along the value chain. The self–sufficient
energy incentives will not only drive up the cost of raw material for
producers, it will tighten the supply especially for tallow based
economies. The export taxes will not only make it prohibitive for foreign
companies, especially those located outside Asia, to source the high in–demand,
medium–chain, fatty acid raw material; it will also mean that local producers
gain an unfair monetary advantage over the competition since derivatives of
these fatty acids or refined acids such as fractionated and distilled cuts are
exempt from this export tax.
The
exponential growth in certain segments of the oleochemical family led to the
devastation of important ecological systems that cannot be recovered. In
addition it resulted in the diversion of not only vital food ingredients, but
the arable land used to grow the crops such was the eagerness of a number of
companies to benefit from the high value demand. The industry is now
going to great lengths to, not only meet the growing needs of the market, but
to do this in a way that is sustainable while minimizing the impact of the food
supply chain.
SCOPE
AND FORMAT
As
the social condition of citizens in the developing nations rises, so too will
the demand from these communities for more premium and westernized products,
reflecting the higher standard of living status.
Oleochemicals,
such as fatty acids, will be a vital link in the supply chain as their
outstanding functionality and versatility make them ideal to be used in a
multitude of applications. On top of this the high reactivity of this
acid enables the production of a range of derivatives that can be tailored to
meet the needs of a number of end using industries, working with the
formulators to produce the ideal blend of functionality and performance.
The
range of derivatives is dependent on the reaction site used. Derivatives
can be produced using the acid functionality such as saponification,
esterification, ethoxylation, or amination while derivatives based on the
unsaturation include isomerization, dimerization, epoxidation, and hydrogenation
acids.
Fatty
acids and their derivatives have a range of functionality that can be used to
support the move away from the petrochemical based platform that is reliant on
the rapidly reducing fossil fuel industry since all the easy oil has been
extracted and the remaining oil is more inaccessible, more remote and located
in more inhospitable environments. While the equivalent renewable bio
refinery type platform has a long way to go to be commercially viable and
suitable to replace the petrochemical platform, oleochemicals will be a major
contributor to such development. For instance the ester derivatives have
the functionality of surfactancy,
lubricity
and solvency, which deliver the following benefits:
- The ability to reduce the surface tension between a polar and an apolar medium, which is important for cleaning and emulsification.
- The ability to reduce friction, which is needed for lubricant applications.
- The ability to dissolve chemicals, which is key to providing a greener solvent substitution for cleaning.
This
report provides an understanding of how the composition of various fats and
oils transform into the range, quality and types of acids produced and the
applications for which those acids can be used. It explores the various
attributes of different acid types and how these cuts compete with synthetic
formed products from the petrochemical route and the major applications
outlets.
This
study will reveal the developments and research that demonstrate the green
credentials of the oleochemical family and how these credentials are changing
the environmental profile of the chemical using industry. This is helpful
to the transformation from that of a major polluter to an industry working in
harmony with its environment to meet the needs of the current generation
without detrimental effects on its surroundings that would impact the
generations to come.
The
study is divided into a number of sections and covers the following fatty acid
types:
- Stearic acid.
- Distilled fatty acids.
- Fractionated fatty acids.
- Polyunsaturated acids including tall oil fatty acids.
- Oleic acids.
The
fatty
acid oleochemical business is important for the following reasons:
- It is a major source of surfactants, which are starting materials for the detergent, cleaning and personal care industries.
- The functionality and performance combination enables formulators to deliver tailored solutions to meet a variety of customers’ needs.
- It is an important cornerstone in the development of a sustainable chemical platform to reduce the reliance on fossil fuel based chemistry.
- It promotes the development of green chemistry that is environmentally friendly.
- Conversion of solid fats and liquid vegetable oils into a straight chain saturated or unsaturated carboxylic acid can be used in edible and non edible markets.
METHODOLOGY
AND INFORMATION SOURCES
The
insight and analysis contained within this report are based on information
gathered from a cross section of oleochemical manufacturers, end users and
other informed sources. Primary interview data was combined with
secondary information gathered through an extensive review of published
literature such as trade magazines, trade associations, company literature,
conference material, patented technology, social media sites and online
databases to produce the baseline market estimates contained in this report and
building on the data collected in the previous review.
With
2008 through to 2011 as the baseline, changes within each application were
discussed and projections for each segment were developed for 2012 through
2017. Key findings were summarized, as well as tested, confirmed and
debated with important contacts in the industry. BCC Research understands
the market drivers and their impact from a historical and analytical
perspective, which enabled the extraction and discussion of major developments
and the subsequent impact on the markets.
The
analytical methodologies used to generate market estimates are based on a
projection of world economy, world trade and technology developments. All
dollar projections presented in this report are based on 2012 constant dollars.
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